Crypto research firm Delphi Digital has proposed a new sentiment indicator to gauge how the general populace feels about the crypto market and predict major market tops and bottoms. The indicator is based on the number of crypto-related YouTube channels a person is subscribed to, the hours spent per day watching these videos, and the number of subscribers for each channel.
According to Delphi research analyst Priyansh Patel, analyzing the relationship between the average weekly views and subscriber growth/decline of popular crypto-related YouTube channels can shed light on retail participation in the market. Patel believes that retail investors are usually the last to board the rally and exit the market, and their decision to invest is often based on the information disseminated through freely available sources like YouTube and blogs. Hence, a pick up in viewership for YouTube channels can be seen as a contrary indicator, just as Google search trends or investor sentiment surveys.
Key takeaways
- Delphi Digital proposed a market sentiment indicator built on crypto YouTube activity: channels subscribed to, hours watched per day, and subscriber counts per channel.
- Analyst Priyansh Patel argues retail investors are typically last into a rally and last out, and that they act largely on free sources such as YouTube and blogs.
- Weekly view and subscriber changes for channels including The Moon, BitBoy Crypto, DataDash, EllioTrades Crypto and Ivan on Tech have historically tracked crypto boom-bust cycles.
- Subscriber growth for The Moon and Ivan on Tech peaked in early 2021 as Bitcoin first passed $60,000, and did not recover even when Bitcoin set a new high of $69,000 that November.
- At the time of writing, Bitcoin was up more than 70% year to date without any corresponding lift in those channels — which Delphi read as retail still sitting out after the prior bear market.
Data tracked by Delphi show that the weekly change in views and subscriber counts of popular channels like The Moon, BitBoy Crypto, DataDash, EllioTrades Crypto, and Ivan on Tech have historically mimicked the crypto boom-bust cycles. For example, the weekly gain in the subscriber count and viewership for “The Moon” and “Ivan on Tech” peaked in early 2021 as bitcoin (BTC) reached its first significant high above $60,000 and quickly fell to $30,000. The cryptocurrency bounced back to a new all-time high of $69,000 in November 2021, but failed to bring new business to the two channels. In the subsequent 12 months, the weekly gain in viewership and subscriber count followed the bearish broader market trend. More importantly, bitcoin’s year-to-date gain of over 70% has yet to boost both channels’ subscriber base and viewership.
Delphi believes that this is a sign that the general population is still sitting on the sideline, hungover from last year’s brutal bear market. Patel also notes that analysis of popular social media platforms like Twitter, Reddit, and blogs can be as effective as YouTube viewership in gauging retail sentiment.
How to Use the Crypto Sentiment Indicator
Savvy traders and professional money managers can use the crypto sentiment indicator as a contrarian indicator, buying when the retail sentiment is too pessimistic and selling when the sentiment is overly optimistic. For example, if the number of crypto-related YouTube channels you are subscribed to and the hours you spend watching these videos have increased significantly, but the subscriber counts and viewership for popular crypto channels are declining, this could be a sign that the retail market is getting too greedy and that a market top is approaching. Conversely, if the number of crypto-related YouTube channels you are subscribed to and the hours you spend watching these videos have decreased significantly, but the subscriber counts and viewership for popular crypto channels are increasing, this could be a sign that the retail market is getting too fearful and that a market bottom is approaching.
It is important to note that the crypto sentiment indicator is not a perfect predictor of market tops and bottoms. However, it can be a useful tool for traders and investors to gauge the sentiment of the retail market and make informed trading decisions.
Frequently asked questions
How is the indicator meant to be used?
As a contrarian signal. Buy when retail sentiment looks too pessimistic and sell when it looks too optimistic, on the reasoning that retail enthusiasm peaks near tops and disappears near bottoms.
Why YouTube specifically?
It is where non-professional investors get their information for free, so viewership tracks retail attention more directly than price does. Patel notes Twitter, Reddit and blogs can serve the same purpose.
How reliable is it?
The article is explicit that it is not a precise predictor of tops and bottoms. It is offered as one sentiment input among several, comparable to Google search trends or investor sentiment surveys.
